Tuesday, January 31, 2012

Creating jobs in France

As we approach the forthcoming elections in France, with radically different programmes on offer from left and right, it seems the French are still struggling with the idea of simplifying the mass of rules and regulations surrounding the creation and management of even small business.

Even though the French auto-entrepreneur scheme has been a relative success (with nearly a million new business creations since its launch) the social security system remains in a total mess, divided as it is into numerous organisations or special regimes depending on your occupation. The situation becomes even more nightmarish if you undertake more than one recognised activity. A lecturer at the Sorbonne complained to me 'for the French social authorities I am two people - a lecturer and a consultant - paying two lots of charges to two different organisations. I also happen to have inherited 20 hectares of land which it is easier to simply let out to a local farmer: If I even thought about cultivating it myself, I would have to join also the special regime for farmers and growers. It is complete madness'.

Retired British people living in France are particularly badly hit, especially if they receive a British pension and depend on the French basic health care system for their sickness cover. Registering as an auto-entrepreneur (self-employed) alters all this, with loss of the basic cover and compulsory entry into a social regime covering the type of work undertaken (from craftsmen to business consultants). As a result many people simply give up, at a time when it is prudent for all of us to try and earn and save a little extra, and not have to rely on handouts from the state, even where these are available. 

As a 'victim' of this complex system I have had several meetings with representatives of the various French social organisations and explained the British system - basically explaining that you can receive a pension and work at the same time, paying some income tax (after deducting expenses) above the limit of of one's individual allowances. 'It is really as simple as that?' said one astonished official, 'Yes' I replied as I contemplated the 16 different deductions (social charges) on my payslip - in reality an A4 sheet! - which included 'pension contributions'........

France is not alone in maintaining a complex regulatory system for new business startups (a minefield of regulations, restrictions, licences and permissions) and for the collection and payment of tax and social charges. In a recent interview with young people facing unemployment in Italy, Spain and Greece, several complained of the practical barriers to starting even the smallest business, administrative delays and in some cases the need to hand over a fee (bribe) to a government official in order to get anything done.

It is surprising that in these times of crisis and large-scale unemployment, neither side in France's election campaign has come forward with anything like a solution. 

P-D de R.